US and Japan Unite to Stem Yen's Plunge

Tokyo and Washington have jointly intervened in currency markets for the first time in nearly 30 years to support the Japanese yen, which has been plummeting due to higher US interest rates, rising oil prices, and persistent capital outflows. According to the Financial Times, the Federal Reserve Bank of New York sold euros to buy yen on behalf of the US Treasury last Friday through Goldman Sachs and Morgan Stanley.

The reported intervention came after the yen slid to 163.24 per dollar in July, its weakest level since 1986. The currency has been under pressure due to a wide gap between interest rates in Japan and those in the United States and other major economies, which has encouraged investors to engage in 'carry trades', borrowing cheaply in yen and investing in assets with better returns elsewhere.

Analysts estimate that Japan's intervention may have totaled around 8.45 trillion yen ($52.8 billion), although the Nikkei business daily put the amount at between 6 trillion and 7 trillion yen.